Career Laboratory

Thursday, February 26, 2015

This blog was inspired by the very last episode of the
popular television drama “Breaking Bad” [spoiler alert!]. Walter White, once a
milquetoast chemistry teacher and now a ruthless drug baron, confesses to his
wife that he did not persist in his life of crime for his purported reason,
which was to acquire a nest egg for his family to live on after his death. “I
did it for me. I liked it. I was good at it. And I was really—I was alive.”
Setting aside the matter of his enjoyment—which, in career development, would
fall into the category of interest—let’s consider what it means to be good at
crime. Is criminality a skill?

If we consider what it means for criminality to be a career—which
means setting aside crimes of passion—we see it takes several forms. It includes
such illegal pursuits as armed robbery, counterfeiting, selling illegal drugs,
confidence rackets, and identity theft, among others. However, it also includes
crimes that some people commit as part of what otherwise would be a law-abiding
career—for example, securities traders using insider information or oligarchs conspiring
to strangle competition.

Both kinds of criminals need to be skilled at the particular
type of crime that they commit. For example, the counterfeiter has to be good
at producing a realistic imitation of genuine currency. The drug dealer needs
to be good at making connections with buyers. The identity thief needs to have
skills with computers or with some other way of obtaining personal information
about victims. These skills therefore are highly specific to each kind of
criminal enterprise. White-collar lawbreakers need to have the skills that
establish them in the law-abiding careers from which they veer into
criminality—again, highly specific skills that can’t be summarized as a skill
at criminality.

All kinds of career criminals also need to be skilled at
escaping detection by the authorities. Here again, the skills are specific: The
counterfeiter has to be skilled at passing funny money in ways that will escape
notice, at least in the short term. The drug dealer needs to know how to
operate stealthily. The securities trader who makes a killing based on insider
information has to be skilled at manipulating the source of information to keep
quiet. Any of these criminals might also corrupt law enforcement by using interpersonal
skills, in addition to bribes.

Although these various criminals have highly diverse skills,
one skill that many criminals have in common is the ability to use violence.
Violence can help the criminal escape detection—silencing potential informers
by threats, mayhem, or extermination. It can also fend off competition and
theft. After all, someone who, like Walter White, is earning money from a
criminal enterprise cannot expect the law enforcement authorities to protect
his assets. Other outlaws understand this and will victimize the criminal who
does not defend himself and his loot. White-collar criminals are mostly
unlikely to resort to violence, but it is one skill that cuts across a broad
swath of criminals.

However, even violence is not a single skill. One criminal
may be talented at personally using a gun or fists, whereas another may be
skilled at identifying and recruiting thugs. (That is Walter White’s strong
suit.)

The skill that perhaps is to be found most universally among
criminals is the ability to live with themselves, knowing what crimes they have
committed. True, some criminals don’t need this skill because they are
sociopaths, without empathy and incapable of feeling guilt for their actions. But
criminologists say that these people are rare. Most criminals understand that
they are doing wrong and have to deal with that understanding.

Generally, they adopt defense mechanisms: I’m doing this for
my family (that’s Walter White’s). I’m doing this because society has conspired
against me and I’ll never succeed in the straight world. I’m doing this to
sustain a great company that employs thousands of people. I give a lot of money
to widows and orphans. I get a lot of respect (from some people). One more big
score, and then I’ll retire and go straight. Everybody does it.

Ultimately, this skill amounts to an ability to rationalize.
Or you might call it hypocrisy, which Francois de La Rochefoucauld called “the
homage vice pays to virtue.” It’s not a skill to be proud of; criminality is
not something to be proud of. It is often regarded as a weakness, but I
maintain that it functionslike a skill to the extent that it
allows people to pursue one kind of career: crime.

Friday, February 13, 2015

Everyone knows that the nation is now recovering from the worst recession since the Great Depression. But not every industry sank into recession or recovered from it on the same schedule. In fact, some did not sink at all, and some have not yet recovered. I thought it would be interesting to look at employment in the major industries and see how their experiences varied over the course of the years from 2007 to 2013.

I obtained figures from the Occupational Employment Survey of the Bureau of Labor Statistics and graphed them. (Note that for the second and third graphs below, the y axis starts at a number greater than zero. I used scales that would emphasize vertical shifts. If you find the graphs below rather small to read, just click on the links that pull up larger versions.)

The most important lesson to take away from all three graphs is that the low-tide mark of employment in most industries did not happen right after the financial crisis of 2008, but rather two years later, in 2010. When recession first strikes, employers generally try to hold onto skilled workers and hope for a quick turnaround to better times. They may have a cushion of resources that enables them to postpone layoffs

But when the economic slump drags on and the rainy-day funds are expended, employers start to shed workers. And as unemployed people draw down their own rainy-day funds cut back on their own expenditures, the slackening demand adds to the woes of employers. This is the recessionary spiral that can take a few years to hit bottom. Europe, which chose the path of austerity rather than stimulus, seems stuck in a valley, but the American economy, as a whole, started to turn upward after 2010.

But different industries have followed different paths. Let's start by looking at the first chart below. (Larger image here.)

Of these seven industries, only three follow the classic U-shaped curve of loss and recovery: the purple line, Mining, the pale blue line, Real Estate and Rental and Leasing, and the orange line, Arts, Entertainment, and Recreation. It's not surprising that Real Estate follows this U curve, because a dramatic loss of real estate value is what precipitated the financial crisis. (Note that, like property values in most locales, employment in this industry has not recovered the pre-recession level.) It's also to be expected that the Arts would lose business during recession, although the downward dip of the curve is really quite shallow. These jobs seem to be less sensitive than you might expect. Mining, on the other hand, actually owes its dramatic uptick in recent years not as much to the economic recovery as to the developing technology of fracking.

Management of Companies and Enterprises, the turquoise line, hardly declined at all during the recession and more recently has been making impressive gains. Everyone knows managers who lost their jobs in that downturn, but apparently jobs in management are less sensitive than those of rank-and-file workers.

The two lines at the bottom--for Utilities (green) and Agriculture, Forestry, Fishing, and Hunting (dark red) are almost level rather than curving. People need electricity, water, and other utilities no matter how the economy is doing, and a cutback in volume (for example, less use of electricity for manufacturing) has little effect on the number of people needed to work at the utility plant. Agriculture sometimes suffers from downturns in prices because of overproduction, but the rapidly rising world population and some diversion of crops to biofuel production seem have kept employment steady in recent years.

The really dismal story here is what happened to the Information industry--which consists mostly of the media, not computer technology. Like Mining, this industry has been affected mostly by technology, but not in a good way. As more and more media content migrates to the Internet and media companies consolidate, the need for workers has reached a permanently lower level than before the recession.

Now, let's look at the second chart. (Larger image here.) All of these medium-sized industries follow the classic U-shaped curve, although there are two interesting variants on the U shape: Construction (pale blue, second from the top) dropped off very steeply after the housing bubble popped and is still a very long way from recovering to its pre-recession level. Professional, Scientific, and Technical Services (orange, at the top), by contrast, has already recouped all the lost jobs and is reaching new heights. This industry includes America's premier field, high tech.

The third chart (larger image here) shows the largest industries. Here, the most dramatic curve is the light red line at the top, Health Care and Social Assistance. As I predicted in my 2008 book 150 Best Recession-Proof Jobs, this industry was unfazed by the recession because it is vital to life and has been gaining in demand because of the aging Baby Boomers. Expect this upward path to continue.Educational Services (turquoise) is actually an upside-down U, peaking when other industries bottomed out and falling slightly thereafter, although this curve is very shallow. This is another industry that I predicted would be recession-proof, because people seek additional education during an economic downturn--displaced workers retooling for new jobs or young people postponing their entry to the workforce. The slight downturn in more recent years is largely explained by cuts in public education budgets, a consequence of the political movement to lower taxes, and by the increasing use of adjunct teachers in postsecondary education.The orange curve for Manufacturing resembles the path taken by Construction in the previous chart: a steep decline into recession, followed by a slow and inadequate recovery. In dollar terms, Manufacturing has actually bounced back, but employers in this industry rely more heavily on automation than they did a decade ago, so fewer human workers are needed.The path for Retail Trade (pale blue) is a much shallower version of this same curve. As consumers have opened their wallets, retail purchases have returned, but automation--especially the large amount of buying that gets done on websites--has reduced the number of workers.

The takeaway from this set of charts is that it is possible to ride out a downturn with minimal risk of job loss, provided you establish a career in a recession-proof industry. But it also shows that technology can cause long-term, perhaps permanent changes in the need for workers in some industries. As technology advances, it may increasingly affect employment in industries that previously have not felt its impact, such as education, health care, and professional services. One of the best ways to find job security is to work with technology in any field at a high level of skill.

Thursday, February 5, 2015

As teenagers turn into adults, they and their parents need
to renegotiate the terms of their relationship. The parents have to let go of
the control that they had over their children’s’ lives, and the new adults have
to learn how to fend for themselves without the parental safety net. The
transition usually takes several years, during which there are always awkward,
even painful moments when the two parties’ expectations don’t totally match.

Something similar has happened as the employer-employee
relationship has changed in recent decades. Traditionally, employers have had certain
expectations for their employees: high-quality work output, low absenteeism, a
good attitude, and reasonable cost. Employees have had their own expectations:
a reasonably good work environment, respect, steady employment, and at least a living
wages. Starting in the late 1970s, these expectations began to weaken or even fall
away, but during this period of transition, the two parties have often found
their expectations were not in synch.

The first big dislocation was the wave of downsizing that began
in the 1970s and 1980s. Companies decided that their need to contain costs was
more important than meeting their employees’ expectation of steady work.
Loyalty became a thing of the past. In making this move, employees banked on
the notion that the quality of work output would not diminish with employees’
loss of security. My generation, the Baby Boomers, never completely adjusted to
the new reality. Books like What Color is
Your Parachute? taught many of us how to deal with this situation, but we
did not and still largely do not accept that this is the way jobs ought to be.
Our expectations are stuck in the model of the 1950s and 1960s economy.

However, it’s also true that many employers did not fully
appreciate how they had changed the nature of the relationship. I experienced this
when I returned as a consultant to work for a company where I had been downsized
after many years as a salaried employee. The company presented me with a
contract that included a two-year
noncompetition clause. I was flabbergasted. The company was saying, in
effect, that they had no loyalty to me but that I had to be 100 percent loyal
to them. I refused to sign the contract unless that clause was removed. They
needed my skills badly enough that they conceded on this point.

In the 1990s, automation killed off some jobs but added so
much productivity to other jobs that the economy as a whole did very well, so
the employer-employee relationship did not change greatly. But as the century
turned, computers got smarter and began to displace more workers and, worse
yet, globalization resulted in the offshoring of hundreds of thousands of
manufacturing jobs. Employers were happy with the reduced cost of foreign
workers and the quality of their work, while the absenteeism and attitude of
these foreign workers were somebody else’s problem. To find steady work, many
former employees of manufacturing jobs now had to shift to service jobs and
lower their expectations for the work environment, for respect, and even for
living wages.

The latest dislocation is the arrival of what is often
called on-demand work or the “Uberization”
of the workforce. Technology now makes it possible for employers to take on
workers for assignments that last only a few hours or less. The work may be
driving passengers for Uber or Lyft, performing cleaning or other home services for
Handy (formerly Handybook), or doing almost any kind of low- to moderate-skill task
for TaskRabbit or Mechanical Turk. By using these temporary workers, who are
classified as independent contractors rather than employees, employers can still meet their
expectations for low cost, and customer feedback about individual workers
ensures that the quality of work output and perhaps workers’ displayed attitude will not
suffer. Absenteeism is not a problem as long as there is a sufficient pool of
interchangeable workers. Some workers are able to earn better than a living wage in these
arrangements, but many do not, and few can count on steady employment or
respect in this relationship.

It is possible that many workers have become so beaten down,
especially following the Great Recession, that they have lowered their
expectations to the point where they can accept this new relationship. But several
lawsuits are revealing small but significant instances in which employers’
expectations are out of synch with the realities of using on-demand workers.
Last year, FedEx drivers won an
appeals court ruling that they are not independent contractors, because the
employer requires them to wear company uniforms, drive company vehicles, and
maintain company standards for grooming. A current lawsuit
against Handy makes a similar argument, stating that the employer does not
treat its workers as contractors because it requires them to adhere to strict
guidelines on matters such as what clothes to wear, when to ring customers’
doorbells, when to listen to music, and how to use the bathroom. Still another
lawsuit, this
one also against Handy, happened when the company stopped using a contractor
because she subcontracted the work to her sister.

In the traditional employer-employee relationship, the
worker’s expectations of good work conditions and a living wage were
guaranteed by laws that governed workplace safety, minimum wage, overtime pay, Social
Security payments, unemployment insurance, and the right to unionization. These
laws mostly do not apply to on-demand work situations. On-demand workers may
also face new kinds of liabilities. For example, when I was a full-time
employee and drove from my office to a meeting at another site, my employer provided
insurance coverage for the trip. Uber drivers, on the other hand, are insured
by Uber only for the time when they have a passenger in their car; they
are not covered when they drive to, from, or between assignments.

Perhaps what is needed is a new category of worker, “dependent
contractor,” who would have some protections that independent contractors lack.
A court in Canada ruled that this
kind of worker has the right to reasonable notice of termination. Germany recognizes
several
rights for these workers.

Can the United States protect on-demand workers? I am
pessimistic. The major constituencies that influence workplace policy are the corporations
and the unions. Most corporations are not interested in making these
concessions to workers, and few on-demand workers are union members.

Wednesday, January 28, 2015

In the past, when talking about the use of robots to replace
human workers, I have often given the example of ground transportation at the
airport. To get from Terminal A to Terminal B at many airports, you take a
robot-controlled trolley. No human judgments are needed to navigate the rails,
make the stops, and open and close the doors. However, to get from the airport
to your hotel, you take a shuttle driven by a human, because a robot cannot
make the many judgments that are required to navigate through traffic out on
the streets.

This example used to be a way I would indicate that some types
of jobs may never be replaced by robots. But recently I am using this example
to illustrate how robots may soon be extending their reach. Google
has been experimenting with robot-driven cars for several years and has
already logged hundreds of thousands of accident-free miles. The self-driven
cars use GPS to understand their route and can consult a database of
information to learn about speed limits and other considerations that we human
drivers learn from signage. They avoid accidents with other cars or careless
pedestrians by means of the same radar technology that is now being offered as
an accessory in human-driven cars. Google’s technology is still experimental,
but in a few years we may see it being used in airport shuttles, probably
beginning with trips that involve the fewest variables, such as to and from the
airport’s rent-a-car lot. I suppose the robot shuttle vans will also need to provide
some mechanism that lifts heavy suitcases in and out of rear storage. And you
won’t need to tip the robots.

When will these robot drivers take over? First, jurisdictions
will need to change traffic laws that do not presently allow driverless
vehicles on the roads, and you can expect some pushback from the Teamsters
Union and other representatives of the people who earn their living by driving.
Secondly, the cost of the technology will need to come down to the point where companies
that deploy fleets of cars and trucks will save money by switching to robots.
Besides saving on wages and benefits, fleet owners may realize savings if robot
drivers prove to be safer than human drivers, as preliminary
data indicates. It may take many years before all of these stars align, so
human drivers can probably expect at least a decade’s reprieve.

The outlook changes, however, when you look at occupations with
a shortage of human workers. There are lots of people who are qualified to
drive airport vans. As far as I can tell, most states do not require a special
license for the drivers, although employers look for a clean driving record. A modest
level of fitness is necessary to handle passengers’ luggage, and the driver
must speak English well enough to understand passengers’ destinations. But
millions of Americans have these qualifications, so it is not hard to find
workers to fill these jobs.

Long-distance truck driving requires a higher level of
skill, and there currently is a
shortage of qualified drivers. However, the higher skill requirements,
which are reflected in the special licensure needed for this work, also mean
that robots will probably take longer to make inroads into this occupation.

Japan furnishes a fine example of how a shortage of human
workers can accelerate the adoption of robots. You may have already read about
how Japan
is using robots to perform certain routine health-care tasks, such as moving
a patient from a bed to a wheelchair. Japan’s aging population means there is a
growing number of elderly patients and a diminishing number of health-care
workers with the physical strength needed to do the work. This provides the
opening for robots.

Japan also has a shortage of workers who can drive heavy construction
vehicles, probably also largely because of the physical demands of the work. The
Komatsu company is planning to fill this employment gap by using
self-driven bulldozers and excavators. Unlike long-haul trucks or even
airport shuttles, construction vehicles function in a closed location and don’t
have to deal with traffic or random pedestrians.

One thing that is particularly intriguing about Komatsu’s
plan is that it also involves another new technology: drones. At a construction site, drones made by the San Francisco
company Skycatch will survey the terrain from above, and the mapping data the
drones gather on the actual lay of the land will be compared to a computerized
map of how the site is meant to be shaped. The self-driving construction
vehicles will then move earth as needed to achieve the desired result; their
work will be periodically monitored by the drones.

Note that this arrangement displaces not only heavy-vehicle
operators, but also surveyors. The Komatsu manager overseeing this project
notes that the old way of surveying a site typically required a week’s work by
two people, whereas the drones can acquire the data in only an hour or two.

Understand that this kind of construction will require some
highly skilled human operators to program the machines, monitor their progress,
and sometimes jump in to take control of a machine as needed. So consider this an
example of how yet one more industry, construction, is seeing a trend toward
eliminating many low-skill jobs and creating a smaller number of high-skill
jobs. I have often said that construction jobs can’t be offshored, but the
other trend eroding jobs—automation—is about to take its toll.

UPDATE.: Drones strike again: An Israeli company is marketing a self-piloted drone that reads water meters remotely. Also, a Dutch student has prototyped a drone that delivers a defibrillator
to a heart-attack victim much faster than an ambulance could. Such
drones presumably could also deliver other medical supplies needed in an
emergency, plus a webcam to allow on-the-spot diagnosis that would
enable helpful bystanders to be coached and thus provide better-informed
first aid. Such drones certainly would not replace the need for EMTs,
but they might mean that fewer EMTs would be needed to cover a
geographic area because proximity would no longer be quite as important.

Wednesday, January 21, 2015

Yesterday’s Wall
Street Journal ran an article titled “More Young Stay Put in the
Biggest Cities.” Drawing on an analysis of census figures, it noted that between
2004 and 2007, “before the recession, an average of about 50,000 adults aged 25
to 34 left both the New York and Los Angeles metro areas annually, after
accounting for new arrivals.” But this turnover of young people diminished
after the recession. “Fewer than 23,000 young adults left New York annually
between 2010 and 2013. Only about 12,000 left Los Angeles—a drop of nearly 80%
from before the recession. Chicago’s departures dropped about 60%.”

The article cites a demographer at the Brookings Institution
who believes that young people may now be stuck in the cities for economic
reasons: They are having more trouble getting their careers (and families) started,
establishing a credit rating good enough to snag a mortgage on a suburban
house, and paying off student debt. I agree that these factors are true for a
lot of young people, but I also wonder why the demographer and the writer of
the article did not consider another possible factor: that urban life may
simply have become more attractive to young people.

The article does acknowledge one reason why young people
flock to the cities: “In tough times, finding well-paying jobs may be easier in
big cities, offsetting their relatively high costs of living.” Actually, there
is a longstanding trend of college graduates concentrating in cities. One economist traced this trend from
1980 to 2000, so it is not just the result of temporary economic stress. As the
percentage of young people with bachelor’s degrees keeps increasing, we should
expect a greater percentage of young urban arrivals to make their permanent
homes there.

And cities have other attractions besides job opportunities
that might make young people less eager to leave. The crime rate in most large cities
has plunged in recent years. Young people are showing diminishing interest in
owning automobiles, a necessity of suburban life. And popular culture has
changed the image of cities from the gritty and drab environment of “The
Honeymooners” to the glamorous setting of “Sex and the City.”

You may be interested in which particular occupations are
concentrated in cities. As it happens, in my recent book Your
Guide to High-Paying Careers, I include a relevant list. Here’s how I
created it: First, I identified the 38 largest metropolitan areas out of all
380 metro areas for which the BLS reports workforce size. For each of the
high-paying occupations in the book (those with a median income greater than
the 75th percentile for all salaried workers), I summed the number
of workers employed in these 38 metro areas and then divided it by the total
number of workers in that same occupation throughout the United States. This yielded
a figure I call the “urban percentage.”

I thought it would be interesting to see how much better the
wages for these occupations are in large cities than in the country as a whole.
To do this, I computed the weighted average of the median earnings in the 38
largest metropolitan areas. (In a weighted average, the pay in each city is
given a weight proportionate to the number of workers in that city.)

Understand that this single figure for the urban wage conceals
the variation that may often be found among different regions. For example,
look at the first occupation on the list: Agents and Business Managers of
Artists, Performers, and Athletes. You’ll note that for this occupation (as for
all the others on this list), the figure for average urban earnings is higher
than the figure for the national average. No surprise here: Pay tends to be higher
in big cities, partly to offset the higher costs of living there. But for the
best pay, you may want to look for work in a particular city where your targeted industry has a large presence.
This occupation earns an average of $103,380 in Los Angeles-Long Beach-Santa
Ana, CA, the urban area that includes Hollywood,
whereas it averages only $28,460 in Tampa-St. Petersburg-Clearwater, FL.

Here are the 20 high-paying occupations with the highest
concentration in cities:

Thursday, January 15, 2015

In last week’s blog, I discussed some of the career-related effects
of the current rapid declines in the price of petroleum. I mentioned that
low-skilled workers in the oil patch will see job losses, and that the
advantages that manufacturing will enjoy from low energy costs will be offset in
some sectors by diminishing demand from the petroleum-extraction industry and
from overseas buyers whose currency is losing ground to the dollar. This week I’m
starting to wonder whether I was over-optimistic about the continuing outlook
for green energy careers.

In the transportation industry, the large purchasers of
energy (such as many airlines) are committed to hedging arrangements that prevent
them of them from rapidly taking advantage of downward swings in price. But other
airlines have reduced their hedging or have used the strategy of call options
that don’t have to be exercised. This is also true for large truck fleets. And,
of course, the current low prices will allow these transportation companies to
lock in rates that will be advantageous when the price rebounds (although that
may take some time). So the low price of oil has improved the long-term outlook
for work in these industries.

Small trucking operations, those least likely to use
hedging, can immediately profit from cheap diesel fuel, which will create opportunities
for drivers and other workers at businesses that use these trucks. In fact,
even before the price of oil plummeted, the long-distance trucking industry was
expecting to face a shortage of drivers. A year ago, the Bureau of Labor
Statistics was already saying (after now-obsolete comments on the rising price
of diesel fuel), “Job prospects for heavy and tractor-trailer truck drivers
with the proper training are projected to be favorable. Because of truck
drivers’ difficult lifestyle and time spent away from home, many companies have
trouble finding and retaining qualified long-haul drivers.”

The outlook is not good for state workers in the oil patch.
As extraction slows down, states that depend on severance taxes (that is, taxes
on the extraction of nonrenewable resources) will have less revenue to spend on
road repair, aid to education, and other state budget items. In
2003, Alaska obtained 78 percent of its tax revenues from severance taxes; North
Dakota, 46 percent; Texas, 9 percent. Other states, however, will have more
tax revenue to spend as consumers increase their purchases in response to their
low gas-pump expenditures and the general uptick in employment. Moody’s
Analytics estimates about 5 percent growth in state tax receipts for the fiscal
year ending June 30.

As I mentioned last week, the biggest concern now is a macroeconomic
issue: How much of the declining price of oil is caused not by increased
production but rather by decreased demand resulting from an economic slowdown
in most of the world (with the United States a noteworthy exception)? One
indicator pointing toward the latter explanation is the decline in prices of
many commodities other than
petroleum. The price of copper, for example, dipped sharply this week. A
global recession would hurt job prospects even in the United States because of
diminished demand for American products and services. The European Central Bank
just
got the go-ahead to take measures to stimulate the Eurozone economy in much
the same way that our Federal Reserve did in response to the Great Recession.
It remains to be seen exactly what the bank’s strategy will be, so it’s unclear
whether it will be aggressive enough to provide sufficient stimulus.

Thursday, January 8, 2015

One of the biggest trends in the American economy right now
is the low price of oil. As the price per barrel approaches and sometimes dips
below $50, you can expect some changes in the job outlook for various occupations.
But these are not necessarily easy to predict, and it is important to remember
that the price of oil has a long history of ups and downs. The boom in domestic
production was triggered by the development of fracking technology, but the
continuing plunge in prices owes a large share to the decisions of Saudi
Arabia, which often are based on political rather than market considerations.

The obvious first place to look for career consequences is
the oil industry itself. The total number
of operating rigs in the United States stands at 1,811, down 6 percent from
its peak in the autumn of 2014. According to The
New York Times, “Each rig represents about 100 jobs, from roughneck
field hands to maintenance workers.” The Times
article quotes one analyst as saying, “Exploration and production budgets are
down anywhere from 30 to 40 percent and the cuts are happening faster than we
thought.” He also predicts that the big three drilling companies are “likely to
cut approximately 15,000 jobs out of the 50,000 people they currently employ.”

The author of the article notes that “large-scale layoffs
across the industry are not expected, at least not immediately. Producers
contract their rigs for as long as three to four years, and many companies have
hedges that lock in higher prices than the going market rates. In addition,
producers often need to drill simply to retain their leases or keep their
revenue up.” The more highly skilled workers have the most security, because
drilling companies anticipate that prices will rebound as global demand
increases in coming years. For that reason, I expect the long-term job outlook
to remain excellent for petroleum engineers, who commanded the highest salaries
among college graduates in last year’s survey by the National Association of
Colleges and Employers. The short-term prospects for newly minted petroleum
engineers may not be quite as rosy, however.

Industries that are heavy consumers of energy can be
expected to be the next place where career effects are felt. However,
understand that bulk energy purchasers also use a hedging strategy to lock in
stable prices over several years, so they do not benefit from oil price dips as
quickly as you and I do at our local filling station. For example, this is true
for the highly competitive airline industry. Manufacturing is feeling mixed
impacts. Low prices at the gas pumps are
helping automobile manufacturers to sell more of their highly profitable
SUVs. The steel industry, on the other hand, is experiencing cutbacks
in pipe and tube sales as demand from oil drillers slackens. Domestic steel
is also being crowded out by imports, lured here by the current strength of the
dollar. Manufacturers who depend on exports are finding that the strong dollar
makes their products less attractive overseas.

The shift to green energy does not seem likely to be slowed
much by cheap energy, so prospects are still good for job openings for
engineers and technicians specializing in solar and wind energy production. The
main drivers for this shift are improving technologies and continuing tax
credits. An analysis
by Deutsche Bank predicts that solar electricity will be competitive with grid-based
prices in 47 states in 2016, assuming that the 30 percent tax credit continues.
Even if the tax credit drops to 10 percent when the current law expires that
year, solar electricity will be competitive in 36 states.

The darkest cloud on the horizon is the question of the
economies of Europe and China. The low price of oil is partly the result of
lack of increasing demand from these quarters. If Europe goes into a third
round of recession and Chinese growth continues to cool, diminished world trade
is likely to have an adverse effect across our economy. We can be proud of our
strong dollar when we shop on the Champs Élysées, but eventually a stagnant
world economy will hurt us, too.